Contractor Tip of the Month – May 2014

May 2014

Contractor Tip of the Month

Working for Nothing Most of the Time

By Damian Lang

It is March, 25 years ago. My accountant gives me my end-of-the-year profit and loss statement for the prior year. Wow. I had worked my ass off all year for $17,000. Strangely, that number rang a bell. I remembered making $17,000 on one job alone that same year. I thought, “This is crazy.”

Do you make money on every job you do? Or, like most contractors, do you work for nothing most of the time? Here’s how they successfully do it. They are really profitable on some jobs, lose money on most jobs, then somewhere in between, hope they come up with a profit at the end of the year! Kind of does sound crazy. While I travel the country working with contractors, this is how most contractors’ businesses work: A contractor will tell me about the one job that saved his ass last year and the tremendous amount of money he made on that one good job. Then, his yearly P&L statement shows he made less for the year than he did on the one good job.

Here’s a lesson that I got 25 years ago that I have never forgotten. I was beating my head against the wall, day in and day out, bricking houses as well as doing some small commercial jobs all for $0.25 to $0.35 a brick. One hot day in June, a general contractor named Charlie, who I had bricked some Kentucky Fried Chicken restaurants for, called me. He asked if I would travel eight hours from my home in Ohio to brick a Kentucky Fried Chicken in Virginia. We were busy, and with plenty of work on the books, I kindly told Charlie I was sorry I couldn’t get to his job.

He replied, “That’s too bad as I would have paid you $0.65 per brick to do the job.” That was about double what he paid me on the last couple of KFCs I had bricked for him. I said, “Wait a minute, I think I am available. When does it start?”

“In three weeks,” he responded. I said we would be there, hung up the phone, and thought, “Oh no, how am I going to tell the customers who are waiting to get their houses bricked that they will have to wait even longer?” Needing the extra cash I would make on this one project, I took the heat, called some of the customers, and informed them of a delay in the schedule.

Three weeks later, my crew of seven and I were on the jobsite working from dawn until dusk laying bricks. So, 42,000 bricks and eight days later, I gave Charlie a bill for $27,300. He was tickled to death with the job, and gave me a greatly needed check before we even left the jobsite. I ran some quick math on my expenses, and came up with about $10,000. I smiled big all the way home, knowing I had just made a net profit of $17,000 in eight days. Now this is how to make easy money!

On that March day, staring at the $17,000 yearly profit number, that once big smile faded as the cold hard facts were that I had one good week and worked the other 51 weeks for free. “Alright,” I said, “something has to change.” I started to look at and dissect the profit on each job separately, instead of doing an overview of all jobs together.

You can stop “working for nothing most of the time” by studying the historical performance on every single job you complete. Once you discover production was tight on some job you did, don’t beat yourself up by taking on a similar job, thinking you will get different results. It hardly ever happens that way. Look at each job. Maybe you did better laying blocks than bricks, or on retail verses school projects. Find out where your company is doing the best, and focus on doing more with that part of your business. In my case, if I would have worked four or five weeks all year long on the right jobs, I would have made more than I did “working for nothing most of the time.”

Studying each job individually, instead of taking an average of how you are doing on all projects, should give you all the information you need to only take on future projects that you know you will make you money. Then, get rid of the losers and only do the winners. If you do this, you can work half the time for double the money. And change “working for nothing most of the time,” to working for something all of the time.

Damian Lang owns and operates four companies in Ohio. He is the inventor of the Grout Hog—Grout Delivery System, Mud Hog mortar mixers, Hog Leg wall bracing system and several other labor saving devices used in the masonry industry. He is the author of the book “RACE—Rewarding And Challenging Employees for Profits in Masonry.” He writes for Masonry Magazine each month and consults with many of the leading mason contractors in the country.